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    CAPL
    Earnings call· Jun 2026(Q2 FY26)

    CrossAmerica Partners Q2 FY26 earnings call CAPL

    Aug 6, 2026 Source

    Executive summary

    CrossAmerica Partners Q2 FY26 — Strong Adjusted EBITDA Growth and Improved Coverage

    CrossAmerica Partners delivered a strong second quarter, marked by significant adjusted EBITDA growth and improved distribution coverage, despite a volatile fuel price environment impacting volumes. The company focused on controllable aspects, driving merchandise margin expansion and expense control, while strategically managing its real estate portfolio and credit facility.

    Highlights

    5

    • Adjusted EBITDA increased 40% to $51.8 million in Q2 FY26.

    • Retail segment gross profit increased 13% to $85.7 million, driven by motor fuel margins.

    • Wholesale segment gross profit increased 9% to $27.1 million, also due to higher fuel margins.

    • Merchandise margin percentage in Retail segment improved by 130 basis points to 29.5%.

    • Distribution coverage ratio improved to 1.68x for Q2 FY26 and 1.39x for the trailing 12 months.

    Concerns

    3

    • Retail same-store volume declined 11% year-over-year due to elevated fuel prices.

    • Wholesale segment volume declined 11% due to elevated prices and net loss of independent dealer contracts.

    • Net income declined to $20.8 million in Q2 FY26 from $25.2 million in Q2 FY25, primarily due to lower net gains from asset sales.

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Retail
    Retail segment gross profit increased primarily due to higher motor fuel gross profit, supported by elevated fuel margins despite a decline in same-store volumes. Merchandise gross profit also grew, driven by improved margin percentage and execution in key categories, offsetting traffic declines.
    Gross profit Q2 FY25: $76.1 millionRetail fuel gross profit increase: $7.7 millionSame-store volume decline: 11%Company-operated same-store volume decline: approximately 8%Fuel margin per gallon Q2 FY26: $0.492 per gallonFuel margin per gallon Q2 FY25: $0.37 per gallonInside sales same-store: relatively flatMerchandise margin percentage Q2 FY26: 29.5%Merchandise margin percentage increase YoY: 130 basis pointsMerchandise gross profit Q2 FY26: $31 millionMerchandise gross profit growth YoY: 2%Average company-operated site count decline YoY: 9%Operating expenses decline: $2.1 million or 4%Same-store store level operating expenses decline: approximately 3%
    		—13%—$85.7 million
    Wholesale
    Wholesale segment gross profit increased due to a significant rise in fuel margin per gallon, partially offset by an 11% decline in fuel volume. Volume was impacted by elevated prices and the net loss of independent dealer contracts. Operating expenses declined due to asset sales and conversions.
    Gross profit Q2 FY25: $24.9 millionMotor fuel gross profit increase YoY: 17%Motor fuel gross profit Q2 FY26: $17.8 millionMotor fuel gross profit Q2 FY25: $15.2 millionFuel margin per gallon increase: 31%Volume decline: 11%Same-store performance volume decline: approximately 8%Fuel margin per gallon: $0.111 per gallonOperating expenses decline: $0.8 million or 11%
    		—9%—$27.1 million

    Operational metrics

    16
    Adjusted EBITDA
    $51.8 millionincreased 40% or $14.7 million year-over-year
    Q2 FY26

    Driven by increased motor fuel margin per gallon in both retail and wholesale segments, increased merchandise gross profit in retail, and declining operating expenses.

    Net Income
    $20.8 milliondeclined from $25.2 million in Q2 FY25
    Q2 FY26

    Primarily driven by $29.7 million in net gains from real estate optimization in Q2 FY25 compared to $1.1 million in Q2 FY26, partially offset by lower interest expense and impairment charges.

    Distributable Cash Flow
    $33.6 millionincrease over $22.4 million for Q2 FY25
    Q2 FY26

    Increase due to higher adjusted EBITDA and lower cash interest expense, partially offset by higher sustaining capital expenditures and current income tax expense.

    Distribution Coverage Ratio
    1.68xcompared to 1.12x for the same period of 2025
    Q2 FY26

    Reflects strong cash flow generation.

    Distribution Coverage Ratio
    1.39xcompared to 1.00x for the trailing 12 months ended June 30, 2025
    TTM ended June 30, 2026

    Trailing 12-month performance.

    Distribution per unit
    $0.525
    Q2 FY26

    Paid during the second quarter.

    Total Operating Expenses
    $55 million$2.9 million decrease year-over-year
    Q2 FY26

    Seventh consecutive quarter of declining operating expenses across the organization.

    G&A Expenses
    $6.8 millionslight increase year-over-year
    Q2 FY26

    Primarily driven by higher legal fees and equity compensation expense.

    Capital Expenditures
    $7.4 million
    Q2 FY26

    Accelerated some maintenance capital spending to support site resiliency.

    Credit Facility Balance Reduction
    $10 millionreduced by approximately $10 million during the quarter
    Q2 FY26

    Achieved through underlying performance and asset sales.

    Credit Facility Balance Reduction
    $20 million
    YTD 2026

    Cumulative reduction for the year so far.

    Credit Facility Defined Leverage Ratio
    3.57xcompared to 3.65x as of June 30, 2025
    as of June 30, 2026

    Reflects strong results and debt reduction.

    Target Leverage Ratio
    approximately 4x
    ongoing

    Management's target on a credit facility-defined basis.

    Cash Interest Expense
    $10.9 milliondeclined from $12.1 million for Q2 FY25
    Q2 FY26

    Benefited from a lower average interest rate and lower average outstanding debt balance.

    Swapped Credit Facility Balance
    60%
    current

    Portion of the credit facility balance swapped to a fixed rate.

    Effective Interest Rate (Total Credit Facility)
    5.5%
    end of Q2 FY26

    Effective rate on the total credit facility at quarter-end.

    Industry KPIs

    2
    MetricValueDetails
    FCF shareholder distributions$33.6 millionUSD
    Distributable cash flow per unit share$33.6 millionUSD

    Deals & partnerships

    1
    5 propertiesReal estate optimization$2.7 million

    Sale of 5 properties as part of ongoing real estate optimization efforts.

    Risks & headwinds

    4
    Volatile Broader Operating EnvironmentQ2 FY26

    volatile broader operating environment during the quarter

    Mitigation: team remained focused on the aspects of the business that we can control

    Rising Fuel Price EnvironmentQ2 FY26

    average cost of a gallon of gasoline across the country reaching the high of more than $4.50 per gallon in late May

    Mitigation: ensuring our retail locations are competitively priced to balance long-term customer loyalty with the day-to-day price volatility

    Challenging Fuel VolumeQ2 FY26

    retail segment reported an 11% decline in volume year-over-year

    Mitigation: important investments we've made in recent years to expand our food operations

    Net Loss of Independent Dealer ContractsQ2 FY26

    remaining wholesale segment volume decline primarily due to the net loss of independent dealer contracts

    Mitigation: actively preparing the portfolio for sustainable success

    What to watch in Q3 FY26

    4

    Retail Fuel Margins

    Q3 FY26
    Current$0.492 per gallon
    Targetmoderated

    Why it matters

    Fuel margins significantly impacted Q2 profitability; their moderation in Q3 will affect future earnings.

    Fuel margins have generally moderated as we have started the third quarter, though we and the industry continue to experience bouts of input cost volatility with their resulting impact on margins.

    2 min read7 chapters

    Detailed Narrative

    01

    Leadership Transition

    Maura Topper introduced Jon Benfield as the permanent Chief Financial Officer, highlighting his continued role in the company's strategic priorities. This appointment follows his interim period and signifies a commitment to continuity in financial leadership.

    02

    Operational Focus and Performance

    The company maintained its focus on active control over retail fuel pricing, enhancing convenience store image and offerings, and ensuring efficient wholesale fuel supply. These efforts contributed to strong gross profits in both Retail and Wholesale segments, despite a volatile broader operating environment.

    03

    Fuel Market Dynamics and Margins

    The second quarter was characterized by generally rising fuel prices, peaking at over $4.50 per gallon in late May, which led to elevated fuel margins. Retailers quickly transmitted increased costs to the pump, providing a practical floor to margins. However, this environment also resulted in challenging fuel volumes, with retail same-store volume declining 11% year-over-year.

    04

    Merchandise Sales and Profitability

    Despite flat same-store inside sales, the retail segment saw a strong increase in merchandise margin percentage, up 130 basis points to 29.5%. This improvement was driven by a better merchandise mix and execution in key categories like food, beverage, and tobacco, contributing to a 2% increase in merchandise gross profit to $31 million.

    05

    Expense Management Initiatives

    CrossAmerica achieved its seventh consecutive quarter of declining operating expenses, with total operating expenses decreasing by $2.9 million year-over-year to $55 million. This was primarily due to reduced store-level employment costs in the retail segment and a decline in controlled site count in the wholesale segment, reflecting a focus on operational efficiencies.

    06

    Real Estate Optimization and Debt Reduction

    The company continued its targeted real estate optimization efforts, selling 5 properties for approximately $2.7 million in proceeds during the quarter. These asset sales, combined with strong operational results, contributed to a reduction of the credit facility balance by $10 million in Q2 and $20 million year-to-date, lowering the leverage ratio to 3.57x.

    07

    Credit Facility Amendment

    An amendment to the credit facility was executed on July 15, extending the maturity date from March 31, 2028, to July 15, 2031. The amendment also removed the SOFR credit spread adjustment, further strengthening the company's financial flexibility and long-term debt profile.

    AI-generated summary of the company’s earnings call. Not investment advice.